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Mega Food Parks Scheme & Features

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Presentation on theme: "Mega Food Parks Scheme & Features"— Presentation transcript:

1 Mega Food Parks Scheme & Features
Pre-Bid Meeting for Expression of Interest

2 Mega Food Parks Scheme Scheme formulated to accelerate growth of food processing industry in the country Cluster Based Approach Demand driven with focus on strong backward and forward integration Enabling Infrastructure Creation along the supply chain Creation of Central Processing Centre and Primary Processing Centres Common Facilities and amenities to be assisted Leverage investments in food processing units Stakeholder participation with private led initiative through Special Purpose Vehicle (SPV)

3 Mega Food Parks Scheme Contd...
Assistance to creation of common enabling facilities Typical Project Cost envisaged – Rs crore Land – not eligible for funding out of GOI grant Assistance from Ministry Limited to non-land component of the project 50% of project cost limited to Rs 50 crore in general areas 75% of project cost limited to Rs 50 crore in difficult & hilly areas and ITDP notified areas

4 Mega Food Parks Holistic & cluster based approach- centralized facilities for key activities which are technology and capital intensive Specific focus on setting up backward linkages for establishing viable supply chains - Provision for farm proximate aggregation & minimal processing infrastructure Infrastructure needs of a viable Food park /Zone estimated to be about Rs.1200 million(US $ 30 million) including farm proximate primary processing facilities Emphasis on economic viability

5 PPC – Primary Processing Centre
Mega Food Park Model PPCs would be fed by 5-10 collection centres PPCs on 2-5 acres of land Food park ( acres) fed by PPCs CPC PPC Food Park PPC – Primary Processing Centre CC Extended Storage Processing To Value add Grading Sorting

6 Mega Food Park Model Contd…
Field Collection Centers Primary Processing Centers Precooling, Grading pulping Sorting, waxing, packing , Temporary storage, Central Processing Center Pulping, Aseptic packing, CA chamber, Cold Store QC lab, Logistics center, Processing Units etc Mega Food Park - CPC Importer Exporter Value added Product Domestic sales Fresh Products PPC Domestic Retail sales Farmer Groups Self Help Groups Individual farmers

7 Envisaged Project Components in MFP
Central Processing Centre : To consist of Developed plots for food processing units, Built factory sheds for MSEs and Core processing facilities along with basic infrastructure Core Processing Facilities At CPC : Sorting and grading, Packaging unit, Dry warehouses, Specialized storage facilities including CA Chambers, Variable humidity stores, Pre-cooling chambers, Ripening chambers etc, Cold chain infrastructure, Irradiation facilities, Steam generation & sterilization units, Food incubation-cum-development centers etc. At least 50% of the project cost (excluding land cost) shall be towards creation of above mentioned facilities Above is an indicative list of facilities and SPV may select or induct any facilities based on need & viability Adequate Consultation with the potential food processing units to finalize the components of CPC.

8 Envisaged Project Components in MFP
Primary Processing Centres(PPCs): To serve as spoke for CPC Core Processing Facilities At Primary Processing Centers: Sorting and grading, packaging facilities , dry warehouses, specialized cold stores including pre-cooling chambers, ripening chambers , reefer vans, mobile pre-coolers and collection vans PPCs are envisaged as key components to facilitate strong linkages for sustainable supply for adequate raw materials to ensure at least 250 days of operation PPCs are to be strategically located for an optimum coverage in zone of influence of Mega Food Park.

9 Envisaged Project Components in MFP
Factory Buildings Provision For MSEs – Maximum 10% of total allottable area for setting up units Enabling Basic Infrastructure Roads, drainage, water supply, electricity supply ETP, logistics facilities, weighbridges etc Non –core Infrastructure Admin buildings, training centers, canteen, workers hostel, trade/display center etc: Cost of non-core infrastructure facilities, not exceeding 10% of the project cost, would be eligible for grant purpose Project Implementation Expense Cost of hiring domain consultants (PMC) by SPV – limited to 2% of eligible grant amount

10 Supply Chain Management – Strategy
Appropriate institutional development at grass roots level for backward linkages Involvement of farmers/producers as stakeholders Organizing farmers in SHGs-Cluster approach Possibility of formation of Producers’ Company involving SHGs/ farmers can be an option Wherever possible, Centers to be owned and managed by SHGs/Entrepreneurs Possibilities of contract farming

11 Special Purpose Vehicle
SPV can be constituted by stakeholders like infrastructure developers, FIs/Banks/PE Firms, Org. retailers, Food Processors & other service providers, Farmer Orgs. etc… SPV to be a Body Corporate registered under the Companies Act SPV should have wide dispersal of equity holding so that it enjoys benefit of collective composition Each SPV to have at least three entrepreneurs / business units independent of each other with no common directors at least one should be from the food processing sector with at least 26% equity in the SPV

12 Special Purpose Vehicle Contd…
SPVs to bring in at least 20% of the project cost, including the cost of land, as their contribution- 10% in case of Difficult, hilly & ITDP notified areas Combined net worth of the shareholders of the SPV should not be less than Rs. 50 Cr - Food Processor should have at least 10 Cr of net worth Government agencies may also become shareholders in SPV, holding to be less than 26% of share capital so as to ensure private sector character of the SPV

13 Special Purpose Vehicle Contd…
Reconstitution of SPV allowed but at least 75% of the initially approved shareholders to remain intact during implementation period of project. Following points are to considered while constituting the SPV Promoter with negative net worth in SPV is not allowed Promoter being a defaulter in RBI list is not allowed Proposed equity should be in proportion to net worth of individual promoter

14 Role of Special Purpose Vehicle
Formulation of Detailed Project Report (DPR) Procure land & ensure external infrastructure linkages for the projects  Obtain key statutory approvals/clearances including environmental clearances etc.  Achieve financial closure of project  Responsible for development, ownership & management of Mega Food Park Operating a Trust and Retention Account (TRA) to ensure utilization of grant in a transparent and judicious manner and maintain proper account Execute project in a transparent, efficient & timely manner

15 LAND ISSUES At the time of Final Approval, the SPV must be in possession of requisite Land. If the land is in possession with one of the promoters, then SPV should have clear title of land and it should be duly registered Approval for change in land use for industrial/infrastructural purposes to be taken Provision of “ sub-lease” clause to be stated clearly in case of Government land. The area for CPC should have good accessibility to Market and Transport network

Details of the focus crops & raw material assessment to be provided Viability of Mega Food Park cluster to be established and it should support at least 200 days of operation Inherent risks in the continuous supply of raw materials to be identified and their mitigations to be identified.

17 Role of Program Management Agency
Assist the Ministry in disseminating information about MFP Scheme & sensitizing the potential stakeholders about the MFPS Assist the Ministry in selection of Projects Inviting Expression of Interest for projects under the Scheme Evaluation/appraisal of techno-feasibility reports and DPRs Appraisal of the DPRs Assist in the evaluation of any amendments to the projects/DPRs Assist the SPVs in financial closure Monitor & report the progress of the Mega Food Park projects to the Ministry- Web-based MIS & Monitoring

18 Role of Project Management Consultant
PMC to be appointed by the SPV PMC to be selected from MFPI list of empanelled agencies Any other consultants meeting the eligibility criteria as laid out by MFPI PMC to assist SPV in Preparation of DPR Implementation of project including day-to-day supervision Preparation of BOQs and Bid Process Management in procurement of contractors/materials Assist SPV in release of GoI grant, duly ensuring requisite documentation for release

19 Operational Process of Selection of Project/SPV
Submission of EoI Appraisal of EoI In-Principle Approval Submission of DPR Appraisal of DPR Final Approval of DPR Release of GoI grant – In four phases

20 Evaluation of EoI Appraisal by Programme Management Agency (PMA)
To be Scrutinized by Technical Committee (TC) In-Principle Approval by Inter-Ministerial Approval Committee (AC)

21 Scoring Criteria 25 10 Sl. No. Criteria Max. Points
Viability of cluster 25 Adequate volume of raw materials (should support at least 200 days of operation in a year) A wider mix/variety of raw materials (at least 5 crops) Agreements/arrangements for raw materials 2 Proposed Investment in Core Processing Facilities 10 Upto Rs 50 crores Rs crore More than Rs 100 crore

22 Scoring Criteria Possession of appropriate land 10 5
Sl. No. Criteria Max. Points 3 Possession of appropriate land 10 Complete possession including title to the land recorded in revenue records Allotment letter from State Agencies Agreement to Sale Land identified, but not acquired 4 Number of Stakeholders in the Proposed SPV 5 3-5 More than 5 Extent of involvement of food processing industry and farmer bodies Shareholding Pattern of Stakeholders in the Proposed SPV Food Processor(s) having more than 26% equity None of the promoter having more than 49% of equity holding

23 Scoring Criteria Sl. No. Criteria Max. Points 6
Net worth of Promoters of the SPV 25 Rs crore Rs.75 – 100 crore More than Rs.100 crore 7 Employment Generation 10 Direct - More than 10,000 Between 5,000-10,000 Less than 5000 Indirect More than 20,000 Between 10,000-20,000 Less than 10,000

24 Scoring Criteria Sl. No. Criteria Max. Points
8 Leveraging of Investment in food processing units in the CPC 10 Up to Rs.100 crore Rs crore More than Rs.200 crore Agreements/arrangements with proposed processing units

25 Detail Project Report DPR to be submitted expeditiously – Latest by six months of In-Principle Approval DPR to contain Detailed cluster mapping, raw material assessment, product mix etc Business Plan Technical- Master plan, section design & drawings with quotations Financial- Detail project cost, P&L Statement Management Aspects of the Project

26 Project Cost & Revenue Model Related Issues
Block cost should be provided for most of the components of infrastructure Cap against costs & area allocation for core processing and basic enabling infrastructure as per scheme guidelines are to be followed Developed plots in CPC can only be leased to food processing units and sale of the same is not allowed User charges for various common facilities should be arrived at based on factoring in the GoI grant and existing industry norms

27 DPR Approval Process Approval Process Pre-requisites for DPR Approval
Appraisal of DPR by PMA Scrutiny by Technical Committee (TC) Final Approval by Inter-Ministerial Approval Committee (AC) Pre-requisites for DPR Approval Incorporation and registration of SPV Execution of share subscription agreement Possession of requisite land by SPV Means of Finance In-principle sanction Letter from Bank

28 Release of Grant To be released in 4 installment
1st installment of 30% of grant amount in two phases 1st phase – 10% as advance within 15 days of Final Approval Incorporation of SPV.  Possession of land with SPV as per DPR requirements, and its conversion into industrial use, if needed. Execution of share subscription agreement  Establishment of Trust and Retention Account in a Schedule ’A’ Commercial Bank and signing of TRA agreement  Appointment of a nominee from the Ministry on Board of the SPV- Tenure of the Ministry nominee will be co-terminus to operationalization of the project.  Final approval of the project by AC. Proof of equity contribution of at least 10% by SPV Proof of appointment of PMC Recommendation of PMA confirming the above points

29 Release of Grant…. 2nd phase – 20% of grant amount
Submission of Utilization Certificate for the grant released in the 1st phase of First installment  Details of the contribution of the SPV towards its share of the project cost.  Sanction Letter for loan Component, in case SPV is taking term loans.  Award of contracts worth at least equivalent to 30% of the total project cost, excluding the land cost. The release to be made within 30 days of the SPV requesting the same, upon completion of aforesaid conditions

30 Release of Grant…. 2nd installment of 30% of grant amount
after the utilization of the 2nd phase of the first installment- Submission of Utilization Certificate (UC) of the 1st Installment. after further proportionate expenditure (equal to the GOI share released) has been incurred by the SPV on the project excluding cost of land. The release shall be made within 30 days of the SPV requesting the same, upon completion of aforesaid conditions.

31 Release of Grant…. 3rd installment of 30% of grant amount
after the utilization of the 2nd installment - Submission of Utilization Certificate (UC) of the 2nd Installment after further proportionate expenditure (equal to the GOI share released) has been incurred by the SPV on the project excluding cost of land. The release shall be made within 30 days of the SPV requesting the same, upon completion of aforesaid conditions.

32 Release of Grant 4th installment of 10% of grant amount on
Successful completion and operationalization of the project At least 30% capacity utilization of common facilities Submission of Utilization Certificate for 3rd installment Separate accounts to be kept for GoI funds Refund with accrued interest as per GoI norms in event of SPV withdrawing from the project

33 Thank You

34 Welcome to “Q & A” Session

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